By Carole R. Engle
ENGLE-STONE AQUATIC$ LLC
The previous Economics and Marketing column discussed a number of factors and trends that are driving changes in seafood markets. This column focuses on specific questions and steps needed to develop a strategic marketing plan for your aquaculture business. Figure 1 presents a checklist that can be completed as a guide.
Step 1: Set short-term and long-term business goals
The first step towards developing a strategic marketing plan is to set specific goals for both the short and the long-term. It is best to draft a written description of your expectations for the business that includes estimated profit targets for the next several years. How much profit will make this business be worthwhile for you? Is this a hobby for supplemental income or do you intend for this to be your only source of income?
How much time are you willing and able to devote to this business on a regular basis? Your availability of time will play a key role in how intensive the production and marketing strategies can be.
It is important that you carefully and objectively assess the strengths and weaknesses that you bring to the business. Do you have all the skills and expertise that you will need for your business? These may include: aquaculture production, horticulture production (for aquaponics), marketing, finance, plumbing, electrical skills, and equipment maintenance skills. You will need to hire or contract with someone for the skills and expertise that you do not have.
What is your consolidated (across personal and other business interests) financial position? How much equity can you contribute to the business? If your debt-to-asset ratio is approaching 100%, your financial position is weak and it would be unwise to take on additional debt.
Step 2a: Define what you are really selling
An effective marketing strategy requires clear definition of who your customer base is and why they would buy your product and not someone else’s. It is critical to write down a description of what need and unique benefit your product fills for customers, as prompted in Figure 1. Then, keeping that need and benefit in mind, write out specific information related to the product that you intend to sell, including the number and types of species of animals or plants, the product form(s) (i.e. fresh, frozen),and the size of each type of product and packaging.
Step 2b: Identify your target markets
The checklist in Figure 1 also prompts you to write out a detailed description of your target markets. Who, specifically, wants to buy what you can uniquely provide? Your answer should include the following considerations: lifestyle factors, age groups, gender, ethnicities, and income groups.
Where do the types of people you are targeting do their purchasing? You must identify the specific geographic area, city/state, and the size of your targeted market area. Do your prospective customers purchase from the Internet? How many people are there in your targeted market area? Of the total population, what percent are likely to purchase a product like yours? Of those, what percent are you likely to lure away from products that currently meet needs similar to those provided by your product? How much of your product are they likely to purchase? What price will they likely be willing to pay for the quantity they are likely to purchase?
Working carefully through realistic answers to the above questions for your business will give you an estimate of the volume of product that you will likely be able to sell and the price you will likely receive. This gives you an estimate of the revenue that you may expect from your business.
Step 2c: Develop an effective promotion/advertising plan
Once the key markets and targets have been chosen, an effective promotion and advertising program needs to be put in place. An effective plan is based on definition of a key advertising message that communicates the unique benefits that your product will provide as well as the best form and frequency of advertising (i.e. word-of-mouth, flyers, radio, TV, etc.) for your targeted market. The cost of the advertising program must be estimated carefully.
Step 3: Processing and/or distribution
Additional decisions that need to be made in the strategic marketing plan involve whether the business will engage in processing and distribution. If your targeted market segment requires a processed product, you will need to decide whether to contract processing or to start a small-scale plant to process fish, plants, or other products. If the latter, a separate plan will be needed that includes the following: 1) a production and operations plan that describes the plant’s scope and scale, its location, health department and other processing regulations, labor requirements, and equipment needed. A sourcing plan will be needed that shows how you will attract the raw material that the plant will need. If area farmers are already selling to a plant, what incentives will be needed to attract them to sell to you? A detailed sales plan will be needed that includes targeted volumes, targeted customers, geographic spread of sales, and the sales force. A separate financial plan will be needed to assess the overall feasibility of the processing operation.
A plan for distribution of the product will be needed that includes all the components listed for a processing plant. In addition, the types and numbers of trucks, the mileage to sales locations, the frequency of delivery, the volume to be delivered on each trip, refrigeration, and temperature control capabilities will need to be estimated.
Step 4: Tie the Marketing Strategy Back into the Overall Plan for the Business
The final step is to tie the marketing strategy and plan back to the overall business plan. Do your sales goals match the goals of your production plan? Will your marketing plan achieve the price needed for the business to be profitable? If not, the plan must be adjusted until these parts of the business are well aligned.
Carole Engle holds a B.A. degree in Biology/Rural Development from Friends World College and M.S. and Ph.D. degrees from Auburn University where she specialized in aquaculture economics. Dr. Engle is a past-President of the U.S. Aquaculture Society and the International Association of Aquaculture Economics and Management. She is currently a Principal in Engle-Stone Aquatic$ LLC, and can be reached at email@example.com